Hi, Shrewd!        Login  
Shrewd'm.com 
A merry & shrewd investing community
 Best Of BRK.A | Best Of | Favourites & Replies | All Boards | Post of the Week!
Search BRK.A
Shrewd'm.com Merry shrewd investors
Best Of BRK.A | Best Of | Favourites & Replies | All Boards | Post of the Week!
Search BRK.A

Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A) ❤
Unthreaded | Threaded | Whole Thread (32) |
Author: rayvt ✧🐝  😊 😞
Number: of 15062 
Subject: Re: Latest from Howard Marks
Date: 01/13/2025 9:37 AM
Post New | Post Reply | Report Post | Recommend It!
No. of Recommendations: 2
if you think your trades can improve CAGR by 2 to 3 per cent versus LTBH, then they're probably worth doing.

Improve the CAGR by 2%? Or by adding 2% to the CAGR?
IOW, 10% --> 10.02? or 10% --> 12%?




I was just surprised at how small the improvement in CAGR needed to be for the taxed port to keep up.

$100 invested for 20 years, CAGR 10%, CapGain tax 15%

Pay tax each year:
calc 100 * (1 + (.109 * 0.85)) ** 20
The answer is: 588.33


Pay tax at end:
Before tax
calc 100 * (1.10 ** 20)
The answer is: 672.75 (572.75 gain)

After tax
calc 100 * (1.10 ** 20 - (5.72 * .15))
The answer is: 586.95

Conclusion:
Paying tax every year, you need to get 10.9% CAGR
to equal 10% CAGR for buy&hold.

Indeed, the required additional gain is less that I expected, only about 9% greater CAGR. An extra 0.09%

Of course, there is trading friction that will also come into play. You pay that on every trade. Annually for one case and only once in the other.
Post New | Post Reply | Report Post | Recommend It!
Print the post
Unthreaded | Threaded | Whole Thread (32) |


Announcements
Berkshire Hathaway FAQ
Contact Shrewd'm
Contact the developer of these message boards.

Ticker or Board Name Author

Best Of BRK.A | Best Of | Favourites & Replies | All Boards | Followed Shrewds